For the first quarter of 2019, Methanex (TSX:MX) (NASDAQ:MEOH)
reported net income attributable to Methanex shareholders of $38
million ($0.50 per common share on a diluted basis) compared to net
income of $161 million ($1.68 per common share on a diluted basis)
in the fourth quarter of 2018. Adjusted EBITDA for the first
quarter of 2019 was $194 million and Adjusted net income was $56
million ($0.73 per common share). These results include the impact
of IFRS 16, a substantial change to lease accounting
standards. Excluding the impact of IFRS 16, Adjusted EBITDA would
have been $166 million in the first quarter of 2019. This
compares with Adjusted EBITDA of $197 million and Adjusted net
income of $90 million ($1.15 per common share) for the fourth
quarter of 2018.
John Floren, President and CEO of Methanex,
commented, "The lower Adjusted EBITDA and earnings in the
first quarter primarily reflects lower average realized prices
compared to the last quarter which was partially offset by higher
sales of Methanex-produced methanol. In addition, in a
declining price environment, our margins tend to be lower than in a
stable price environment due to inventory timing differences. Our
average realized methanol price decreased by $70
per tonne in the quarter to $331 per tonne, which
compares to $401 per tonne realized in
the fourth quarter. We were pleased to
see methanol pricing stabilize, supported by steady
demand combined with a number of supply outages
globally.”
“In the quarter, we successfully completed our
first major turnaround at our Geismar 1
facility and subsequently achieved a daily production record
from the plant. We continued our long track record of
returning excess cash to shareholders by returning $31 million
through our regular dividend and share repurchases. On March
18, 2019, we commenced a normal course issuer bid to purchase up to
3,863,298 common shares. To March 31, 2019, we have repurchased
99,893 common shares for $5.8 million. In addition, I am
pleased to announce that the Board of Directors has approved a 9%
increase to the quarterly dividend to shareholders, to $0.36 per
share from $0.33 per share."
“We have $285 million of cash on hand at
the end of the first quarter, a committed revolving credit
facility, and a robust balance sheet. The strategic
investments we have made in our business have strengthened our
asset base, significantly increased our global production
capacity, enhanced our ability to serve customers
and substantially improved our earnings capabilities and cash
generation potential over a wide range of methanol prices.
"Our balanced approach to capital allocation
remains unchanged. We believe we are well positioned to meet our
financial commitments, pursue our growth opportunities and deliver
on our commitment to return excess cash to shareholders through
dividends and share repurchases," Floren said.
FURTHER INFORMATIONThe
information set forth in this news release summarizes Methanex's
key financial and operational data for the first quarter of 2019.
It is not a complete source of information for readers and is not
in any way a substitute for reading the first quarter 2019
Management’s Discussion and Analysis ("MD&A") dated
April 24, 2019 and the unaudited condensed consolidated
interim financial statements for the period ended March 31,
2019, both of which are available from the Investor Relations
section of our website at www.methanex.com. The MD&A and the
unaudited condensed consolidated interim financial statements for
the period ended March 31, 2019 are also available on the
Canadian Securities Administrators' SEDAR website at
www.sedar.com and on the United States Securities and Exchange
Commission's EDGAR website at www.sec.gov.
FINANCIAL AND OPERATIONAL DATA
|
Three Months Ended |
($
millions except per share amounts and where noted) |
Mar 31 2019 |
|
Dec 31 2018 |
|
Mar 31 2018 |
|
Production (thousands
of tonnes) (attributable to Methanex shareholders) |
1,808 |
|
1,885 |
|
1,943 |
|
Sales volume (thousands
of tonnes) |
|
|
|
Methanex-produced methanol |
1,921 |
|
1,599 |
|
1,884 |
|
Purchased
methanol |
473 |
|
908 |
|
613 |
|
Commission sales |
329 |
|
245 |
|
321 |
|
Total
sales volume 1 |
2,723 |
|
2,752 |
|
2,818 |
|
|
|
|
|
Methanex average
non-discounted posted price ($ per tonne) 2 |
392 |
|
487 |
|
475 |
|
Average realized price
($ per tonne) 3 |
331 |
|
401 |
|
402 |
|
|
|
|
|
Revenue |
733 |
|
977 |
|
962 |
|
Adjusted revenue |
800 |
|
1,008 |
|
987 |
|
Adjusted EBITDA |
194 |
|
197 |
|
306 |
|
Cash flows from
operating activities |
213 |
|
218 |
|
245 |
|
Adjusted net
income |
56 |
|
90 |
|
171 |
|
Net income
(attributable to Methanex shareholders) |
38 |
|
161 |
|
169 |
|
|
|
|
|
Adjusted net income per
common share |
0.73 |
|
1.15 |
|
2.03 |
|
Basic net income per
common share |
0.50 |
|
2.07 |
|
2.02 |
|
Diluted net income per
common share |
0.50 |
|
1.68 |
|
2.00 |
|
|
|
|
|
Common share
information (millions of shares) |
|
|
|
Weighted
average number of common shares |
77 |
|
78 |
|
84 |
|
Diluted
weighted average number of common shares |
77 |
|
78 |
|
84 |
|
Number of common shares outstanding, end of period |
77 |
|
77 |
|
83 |
|
1 Methanex-produced methanol
represents our equity share of volume produced at our facilities
and excludes volume marketed on a commission basis related to the
36.9% of the Atlas facility and 50% of the Egypt facility that we
do not own. Methanex-produced methanol includes any volume produced
by Chile using natural gas supplied from Argentina under a tolling
arrangement ("Tolling Volume"). There was no Tolling Volume
produced in the first quarter of 2019 or the fourth quarter of
2018. There was 40,000 MT of Tolling Volume in the first quarter of
2018.
2 Methanex average non-discounted
posted price represents the average of our non-discounted posted
prices in North America, Europe and Asia Pacific weighted by sales
volume. Current and historical pricing information is available at
www.methanex.com.
3 Average realized price is
calculated as revenue, excluding commissions earned and the Egypt
non-controlling interest share of revenue, but including an amount
representing our share of Atlas revenue, divided by the total sales
volume of Methanex-produced and purchased methanol, but excluding
Tolling Volume.
A reconciliation from net income attributable to
Methanex shareholders to Adjusted net income and the calculation of
Adjusted net income per common share is as follows:
|
Three Months Ended |
($
millions except number of shares and per share amounts) |
Mar 31 2019 |
|
Dec 31 2018 |
|
Mar 31 2018 |
|
Net income
(attributable to Methanex shareholders) |
$ |
38 |
|
$ |
161 |
|
$ |
169 |
|
Mark-to-market impact
of share-based compensation, net of tax |
18 |
|
(71 |
) |
2 |
|
Adjusted net income |
$ |
56 |
|
$ |
90 |
|
$ |
171 |
|
Diluted weighted
average shares outstanding (millions) |
77 |
|
78 |
|
84 |
|
Adjusted
net income per common share |
$ |
0.73 |
|
$ |
1.15 |
|
$ |
2.03 |
|
- As at January 1, 2019 we adopted a
new accounting standard, IFRS 16 Leases ("IFRS 16"), using the
modified retrospective adoption approach. As a result of this
method of adoption, the figures for Q1 2019 reflect the adoption of
the standard, while the comparable periods presented are not
restated. The adoption of IFRS 16 results in higher Adjusted EBITDA
for Q1 2019 by $28 million due to changes in the recognition and
classification of lease costs from cost of sales to depreciation
and amortization ($24 million) and finance costs ($5 million), but
has a minimal impact on net income attributable to Methanex
shareholders and Adjusted net income. The adoption of IFRS 16 has
no net cash impact. Refer to the Adoption of New Accounting
Standards section on page 14.
- We recorded net income attributable
to Methanex shareholders of $38 million during the first quarter of
2019 compared to net income of $161 million in the fourth quarter
of 2018. The decrease in earnings is primarily due to a decrease in
our average realized methanol price, partially offset by an
increase in sales of Methanex-produced methanol during the first
quarter and the change in the mark-to-market impact of share-based
compensation.
- We recorded Adjusted EBITDA of $194
million for the first quarter of 2019 compared with $197 million
for the fourth quarter of 2018. Adjusted EBITDA for the first
quarter of 2019 includes the adoption of IFRS 16 which increased
Adjusted EBITDA for the first quarter of 2019 by $28 million.
Excluding the impact of the adoption of IFRS 16, Adjusted EBITDA
for the first quarter of 2019 would be lower by $31 million
compared to the fourth quarter of 2018. The decrease in Adjusted
EBITDA excluding the impact of IFRS 16 is primarily due to the
decrease in our average realized methanol price, partially offset
by an increase in sales of Methanex-produced methanol.
- Adjusted net income was $56 million
for the first quarter of 2019 compared to Adjusted net income of
$90 million for the fourth quarter of 2018. The decrease in
Adjusted net income is primarily due to a decrease in average
realized price to $331 per tonne for the first quarter of 2019 from
$401 per tonne for the fourth quarter of 2018, partially offset by
an increase in sales of Methanex-produced methanol.
- We produced 1,808,000 tonnes in the
first quarter of 2019 compared to 1,885,000 tonnes for the fourth
quarter of 2018.
- Total sales volume for the first
quarter of 2019 was 2,723,000 tonnes compared with 2,752,000 tonnes
for the fourth quarter of 2018. Sales of Methanex-produced methanol
were 1,921,000 tonnes in the first quarter of 2019 compared with
1,599,000 tonnes in the fourth quarter of 2018.
- On March 18, 2019 we commenced a
normal course issuer bid to purchase up to 3,863,298 common shares.
To March 31, 2019, we have repurchased 99,893 common shares for
$5.8 million.
- During the first quarter of 2019 we
paid a $0.33 per common share quarterly dividend to shareholders
for a total of $25 million.
- We announced today that the Board
of Directors has approved a 9% increase to our quarterly dividend
to shareholders, from $0.33 per share per quarter to $0.36 per
share per quarter.
- We continue to make good progress
on a potential Geismar 3 production facility. We continue to expect
to spend approximately $50 to $60 million on this project prior to
reaching a final investment decision with the remaining
approximately $35 million to be spent in the second quarter of
2019. We believe that the potential Geismar 3 project would be
advantaged relative to other projects being contemplated or under
construction in the US Gulf.
PRODUCTION HIGHLIGHTS
|
Q1 2019 |
Q4
2018 |
|
Q1
2018 |
|
(thousands of tonnes) |
Operating Capacity 1 |
|
Production |
|
Production |
|
Production |
|
New Zealand 2 |
608 |
|
437 |
|
389 |
|
487 |
|
USA (Geismar) |
500 |
|
405 |
|
527 |
|
513 |
|
Trinidad (Methanex
interest) 3 |
500 |
|
429 |
|
448 |
|
459 |
|
Chile 4 |
430 |
|
241 |
|
206 |
|
166 |
|
Egypt (50%
interest) |
158 |
|
141 |
|
155 |
|
165 |
|
Canada (Medicine
Hat) |
150 |
|
155 |
|
160 |
|
153 |
|
|
2,346 |
|
1,808 |
|
1,885 |
|
1,943 |
|
1 Operating capacity includes only
those facilities which are currently capable of operating, but
excludes any portion of an asset that is underutilized due to a
lack of natural gas feedstock over a prolonged period of time. The
operating capacity of our production facilities may be higher than
original nameplate capacity as, over time, these figures have been
adjusted to reflect ongoing operating efficiencies at these
facilities. Actual production for a facility in any given year may
be higher or lower than operating capacity due to a number of
factors, including natural gas composition or the age of the
facility's catalyst.
2 The operating capacity of New
Zealand is made up of the two Motunui facilities and the Waitara
Valley facility.
3 The operating capacity of Trinidad
is made up of the Titan (100% interest) and Atlas (63.1% interest)
facilities.
4 The operating capacity of our
Chile I and IV facilities is 1.7 million tonnes annually assuming
access to natural gas feedstock. For 2018, our operating capacity
in Chile was 0.9 million tonnes. In the fourth quarter of 2018 we
restarted our 0.8 million tonne Chile IV plant that had been idle
since 2007.
Key production and operational highlights during
the first quarter include:
- New Zealand produced 437,000 tonnes compared with 389,000
tonnes in the fourth quarter of 2018. Production in the first
quarter of 2019 is higher than the fourth quarter of 2018 as our
Waitara Valley site undertook a scheduled turnaround in the fourth
quarter of 2018 and returned to operations in early January.
Overall, production for New Zealand continues to experience gas
constraints, primarily as a result of natural gas suppliers
completing planned and unplanned maintenance activities. We expect
these upstream maintenance activities to continue in the second
quarter.
- Geismar produced 405,000 tonnes during the first quarter of
2019 compared to 527,000 tonnes during the fourth quarter of 2018.
Production in Geismar for the first quarter of 2019 is lower than
the fourth quarter of 2018 due to a scheduled turnaround of the
Geismar 1 plant completed in the quarter.
- Trinidad produced 429,000 tonnes (Methanex interest) compared
with 448,000 tonnes in the fourth quarter of 2018. Production in
Trinidad is lower in the first quarter of 2019 compared to the
fourth quarter of 2018 primarily as a result of a scheduled
turnaround of the Titan plant that commenced in March 2019. The
turnaround is scheduled to complete by the end of April 2019.
Additionally, we continue to experience gas curtailments in
Trinidad.
- The Chile facilities, Chile I and IV, produced 241,000 tonnes
during the first quarter of 2019 from a combination of Chile and
Argentina sourced natural gas with Chile IV production experiencing
a few minor technical issues during the quarter. This compares to
206,000 tonnes during the fourth quarter of 2018.
- The Egypt facility produced 282,000 tonnes (Methanex interest -
141,000 tonnes) in the first quarter of 2019 compared with 310,000
tonnes (Methanex interest - 155,000 tonnes) in the fourth quarter
of 2018. Mechanical issues experienced during the quarter resulted
in lower production for the first quarter of 2019 compared to the
fourth quarter of 2018. On April 9th, the Egypt facility
experienced an outage and the plant remains off-line. We expect
limited production from the Egypt facility for the second quarter
of 2019 as repairs are made.
- Medicine Hat produced 155,000 tonnes during the first quarter
of 2019 compared to 160,000 tonnes in the fourth quarter of
2018.
CONFERENCE CALL
A conference call is scheduled for April 25,
2019 at 12:00 noon ET (9:00 am PT) to review these first quarter
results. To access the call, dial the conferencing operator ten
minutes prior to the start of the call at (416) 340-2216, or toll
free at (800) 273-9672. A simultaneous audio-only webcast of the
conference call can be accessed from our website at
www.methanex.com and will also be available following the call. A
playback version of the conference call will be available until May
9, 2019 at (905) 694-9451, or toll free at (800) 408-3053. The
passcode for the playback version is 8039337#.
ABOUT METHANEX
Methanex is a Vancouver-based, publicly traded
company and is the world’s largest producer and supplier of
methanol to major international markets. Methanex shares are listed
for trading on the Toronto Stock Exchange in Canada under the
trading symbol "MX" and on the NASDAQ Global Market in the United
States under the trading symbol "MEOH".
FORWARD-LOOKING INFORMATION WARNING
This first quarter 2019 press release contains
forward-looking statements with respect to us and the chemical
industry. By its nature, forward-looking information is subject to
numerous risks and uncertainties, some of which are beyond the
Company's control. Readers are cautioned that undue reliance should
not be placed on forward-looking information as actual results may
vary materially from the forward-looking information. Methanex does
not undertake to update, correct or revise any forward-looking
information as a result of any new information, future events or
otherwise, except as may be required by applicable law. Refer to
Forward-Looking Information Warning in the first quarter 2019
Management's Discussion and Analysis for more information which is
available from the Investor Relations section of our website at
www.methanex.com, the Canadian Securities Administrators\' SEDAR
website at www.sedar.com and on the United States Securities
and Exchange Commission's EDGAR website at www.sec.gov.
NON-GAAP MEASURES
The Company has used the terms Adjusted EBITDA,
Adjusted net income, Adjusted net income per common share, Adjusted
revenue and operating income throughout this document. These items
are non-GAAP measures that do not have any standardized meaning
prescribed by GAAP. These measures represent the amounts that are
attributable to Methanex Corporation shareholders and are
calculated by excluding the mark-to-market impact of share-based
compensation as a result of changes in our share price and the
impact of certain items associated with specific identified events.
Refer to Additional Information - Supplemental Non-GAAP measures on
page 15 of the Company's MD&A for the period ended
March 31, 2019 for reconciliations to the most comparable GAAP
measures. Unless otherwise indicated, the financial information
presented in this release is prepared in accordance with
International Financial Reporting Standards ("IFRS") as issued by
the International Accounting Standards Board ("IASB").
For further information, contact:
Kim CampbellManager, Investor RelationsMethanex
Corporation604-661-2600
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